The Treasurer’s proposed tax cut on beer is expected to make an appearance in today's Budget reveal, despite growing controversy.
Australian Hotels Association CEO Stephen Ferguson met with the Treasurer to push for the tax cut to be included in the Budget. He was joined in support by the Brewers Association of Australia and Clubs Australia to see the average schooner reduced by 30c.
Usually, tax cuts are popular, but Josh Frydenberg’s proposal has been branded ‘sexist’ and ‘ineffective’.
Brewers have asked the government to reduce the excise on beer temporarily by up to 50% to assist pubs and clubs in their post-Covid recovery which will take a $190 million chunk out of the Budget – stretching to $1 billion if left in place for 5 years (which is unlikely). Cheaper beer means patrons are more likely to patronage struggling businesses in the hospitality sector.
However, other bars and boutique distillers have slammed the plan because it disadvantages Australian spirit manufacturers and the hospitality venues that rely on beverages other than beer. They argue that there should be an equal reduction to alcohol excise for all spirits to make the system fair. This is particularly important, as distillers tend to be Australian businesses that have struggled through the closure of their distributors during Covid.
Then there are those voices complaining that cutting only the excise on beer is ‘sexist’ as Australian men drink significantly more beer than women, with women preferring spirits and alcopops.
The difference in gender alcohol preference is pronounced, with the Bureau of Statistics reporting that 17% of regular beer drinkers are women.
According to the Australia Institute, a reduction on beer excise would essentially be a ‘gender-biased subsidy’. The report goes on to say that, “Proposals to reduce the excise payable on beer have the potential to deliver a significant loss of Commonwealth revenue, but little potential to create jobs, stimulate the hospitality sector, or address problematic drinking.”
Australians appear more interested in a tax cut on Fuel Excise, as prices surge following the war in Ukraine. Cost of living is becoming a substantial threat to economic recovery, and while cheap beer will keep a percentage of the working class happy, they are unlikely to thank the government for it when they cannot afford to fill their utes and cars.
There is no question that the Australian government over-taxes alcohol, but if it is to cut tax economists warn that it should be done in such a way that does not upset the competitive market, disadvantage boutique establishments, or encourage binge drinking at a time of economic hardship.
“Any reductions to the price of alcoholic products would be absolutely devastating at a time when we are seeing increases in the many harms from alcohol that negatively impact on far too many Australians,” said Caterina Giogri, of the Foundation for Alcohol Research and Education.
Meanwhile, the Australia Institute report goes part-way to a more suitable recommendation, but still falls short of acknowledging distillers. “Considering the importance of the wine industry to the hospitality and tourism industries more broadly, a cut in relevant wine taxes could likely to more to aid the post-Covid recovery.”
According to the Sydney Morning Herald and The Age, the federal government received nearly $390,000 from alcohol manufacturers for their political campaign. The beer tax cut is likely to stay, with lobbyists from the industry actively targeting Coalition MPs in the lead up to the federal election. Labor also received around $290,000.